Duluth Metals Limited (TSX:DM) received a formal “25% Option Termination Notice” from Antofagasta plc, moving the joint venture to the “40/60 Phase”. Duluth Metals now has a 180 day buy-back right to purchase the Antofagasta 40% equity position at a price equal to Antofagasta’s sunk costs (estimated to be US$220m) plus approximately US$10m currently outstanding (plus accrued and unpaid interest) under the bridge loan Antofagasta provided to Duluth Metals.

As quoted in the press release:

under Section 6.4 of the Second Amended and Restated Participation and Limited Liability Company Agreement between Antofagasta and Duluth Metals on the Twin Metals Minnesota (“TMM”) Project. With the receipt of this notice, the joint venture moves immediately to the “40/60 Phase” and Duluth Metals now has a 180 day buy-back right to purchase the Antofagasta 40% equity position at a price equal to Antofagasta’s sunk costs (currently estimated to be approximately US$220m) plus approximately US$10m currently outstanding (plus accrued and unpaid interest) under the bridge loan Antofagasta provided to Duluth Metals. If Duluth Metals does not exercise its buy-back right, Antofagasta will continue to own 40% of TMM and Duluth Metals will be required to repay the bridge loan facility (plus accrued and unpaid interest), at its option, in either cash or Duluth Metals shares. By delivering the Notice, Antofagasta no longer has the right to acquire 25% of the TMM Project from Duluth after the delivery of the Bankable Feasibility Study and the permitting of the TMM Project. In addition, Duluth Metals becomes the operator of the project and controls the TMM Board and the TMM Technical Committee by having three members and Antofagasta having two members on each.

Duluth Metals Executive Chairman, Christopher Dundas, said:

Duluth Metals is excited about moving the TMM Project through its next phase of project development and continuing to work together with Antofagasta. We are looking forward to publishing highlights of the very comprehensive Pre-Feasibility (“PFS”) Technical Report during the second half of July.